Current account verifies pessimistic expectations

The foreign currency sent back home through official channels by the Romanians working abroad, slightly down anyway, is weighing less and less compared with the more than double deficit of the balance of trade in goods and services.

Eleven months through 2003, Romania’s current account deficit had approached 2.5bn euros, up 85% compared with the same time in 2002. The money to fund the deficit can be found, but this is making the central bank’s effort to contain inflation even harder. Considering that a large part of the foreign currency inflows originating from individuals elude the banking system or the money transfer companies, the positive balance of the current transfers shed 15% from November 2002. In fact, besides the skyrocketing trade deficit, every chapter of the current account deteriorated last year compared with the year before.

The service balance surplus went down from 39 million euros in November 2002 to 19 million euros in November 2003. This was caused by the 14% increase in spending on tourism services abroad, compared with only 9% revenues from incoming tourists, so that the deficit rose to 76 million euros. At the same time, the surplus of the transport service balance was down to half of the 2002 level, amounting to 66 million euros. The revenue segment saw the gap between outflows and inflows widening to a 589 million-euro minus.

The goods segment in November witnessed a 475 million-euro deficit, lower than in the previous month when it had totalled 576 million euros. NBR at the end of last year anticipated the constant import growth could induce an increase in the 2003 current account deficit to 6.5% of GDP. Attaining this level would have pushed the deficit of the current account deficit up by 760 million euros in December.

Romania’s medium and long-term foreign debt had reached 15.2bn euros by late November 2003, up 4.1% from 2002. The eleven-month debt service was worth 2.7bn euros.
razvan.voican@zf.ro